Sanofi revamps top management, chief diabetes exec to leave

n the latest effort to jumpstart operations, Sanofi is shifting top management and replacing the executive who oversees the struggling diabetes franchise.

The move comes five months after Pascale Witz was shifted to run the all-important diabetes portfolio, as well as the cardiovascular drugs business. She will leave next month, according to a brief statement by the drug maker on Monday. Replacing her is Peter Guenter, who has been with Sanofi for 21 years, most recently as executive vice president for general medicine and emerging markets.

The shake-up comes amid a reorganization launched by Olivier Brandicourt, who recently completed his first year as Sanofi chief executive and attempts to revamp the struggling drug maker. Last summer, he created new business units and, more recently, began eliminating numerous jobs to compensate for the slump in the diabetes franchise, which accounted for 22 percent of roughly $38 billion in sales last year (see page 97).

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Over the past two years, the company has encountered price discounting in the long-acting insulin market, a business that Sanofi has dominated in the US. In fact, last fall, Sanofi forecast that global diabetes sales through 2018 are expected to decline at an average annualized rate of between 4 percent and 8 percent. Sanofi hopes a regulatory panel this week will help reverse its fortunes and recommend approval for two diabetes drugs, one of which is a combination treatment that includes its Lantus insulin.

Brandicourt expects to save about $1.6 billion by 2018 by “simplifying” the global organization, reshaping its network of manufacturing plants, and reworking the product portfolio. Toward that end, Sanofi may dispose of its generic drug business and plans to swap its Merial animal health unit for the consumer health care business run by Boehringer Ingelheim.

Since joining Sanofi nearly three years ago, Witz headed the global pharmaceutical business, which included setting strategy for the prescription drug and consumer products divisions. During her tenure, the drug maker attempted to revive its flagging diabetes business by inking a deal to sell the Afrezza inhaled insulin device, which proved to be a bust. Last winter, Sanofi ended the arrangement.

“She was a caretaker in her most recent role, but basically, this is a continuing purge of everybody who had a hand in the old days” of the diabetes team, said David Kliff, who publishes Diabetic Investor. The diabetes portfolio “is not very strong, and they need somebody who can manage in a highly price sensitive market.”

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During the past year, Sanofi also experienced disappointment with sales of its new cholesterol-lowering treatment, a PCSK-9 inhibitor called Praluent. Although the injectable medication can greatly reduce LDL, or bad, cholesterol, Sanofi and its partner, Regeneron Pharmaceuticals — as well as a rival, Amgen — encountered pushback from payers over the roughly $14,000 price tags. Sales have been slow.

Hoping to compensate, Brandicourt wants to expand the oncology business, which accounted for just 4 percent of 2015 sales, by aggressively pursuing Medivation. Sanofi recently made a $9.3 billion bid for Medivation, which sells the Xtandi prostate cancer treatment, but was quickly rebuffed. He then threatened to take the offer directly to shareholders, although other drug makers are now eyeing Medivation as well.